AND MOST "MEDICINE" IS JUST A CONSUMER GOOD:

The Republicans are going to try to replace Obamacare. They're probably going to agree to cover everybody Obama covered, thus essentially granting the Democratic point that health care is a right. But they are going to try to do it using more market-friendly mechanisms. [...]

This would still be nothing like a free-market system -- it would still be a highly regulated, largely public benefit -- but it would rely more on consumer incentives.

The crucial question is: Do market incentives work in health care? [...]

Proponents of market-based health care rely less on theory and more on data. The most fair-minded review of the evidence I've read comes from a McKinsey report written by Penelope Dash and David Meredith. They noted that sometimes market forces lead to worse outcomes, but "we have been most struck by health systems in which provider competition, managed effectively, has improved outcomes and patient choice significantly, while at the same time reducing system costs."

There's much research to suggest that people are able to behave like intelligent health care consumers. Work by Amitabh Chandra of Harvard and others found higher-performing hospitals do gain greater market share over time. People know quality and flock to it.

Furthermore, health care providers work hard to keep up with the competitors. When one provider becomes more productive, the neighboring ones tend to as well.

There are plenty of examples where market competition has improved health care delivery. The Medicare Part D program, passed under President George W. Bush, created competition around drug benefits. The program has provided coverage for millions while coming in at 57 percent under the cost of what the Congressional Budget Office initially projected. A study of Indiana's health savings accounts found the state's expenses were reduced by 11 percent.

Tweet   @brothersjudd